Loonie Slips on Weak Retail Sales, Oil Drop Drives USD/CAD

Key Moments

USD/CAD trades near 1.4170, its highest level since April 2025, as softer Canadian data weighs on the Loonie.
Canadian Retail Sales rise 0.5% in April, missing expectations, while ex-auto sales increase just 0.1%.
Markets price in a 70% probability of a Federal Reserve rate hike in September, supporting the US Dollar.

USD/CAD Extends Gains on Weak Canadian Data

USD/CAD moves higher on Friday, staying firm even as the US Dollar (USD) sees a modest pullback. The pair trades around 1.4170 at the time of writing, marking its strongest level since April 2025, as fresh Canadian macro data undercuts the Canadian Dollar (CAD).

Statistics Canada reports that overall Retail Sales increased 0.5% in April, easing from a 0.9% rise in March and coming in slightly below the 0.6% consensus estimate. Retail Sales excluding automobiles edge up only 0.1%, well under the 0.7% forecast, while March’s ex-auto figure is revised down to 1.2% from 1.4%.

Policy Divergence Between Fed and BoC Pressures CAD

Beyond the data, the CAD faces an additional drag from differing monetary policy paths between the Bank of Canada (BoC) and the Federal Reserve (Fed). At its policy meeting this week, the Fed reiterates its determination to bring inflation back to its 2% target. In the latest projections, nine of 19 Fed officials anticipate at least one rate increase this year.

This more hawkish stance is aligned with a pickup in US inflation. Higher Oil prices have contributed to stronger price pressures, with the May Consumer Price Index (CPI) accelerating to 4.2%, the fastest pace since April 2023.

Following the Fed meeting, market pricing reflects a 70% chance of a rate hike in September, according to CME FedWatch data, lending further support to the Greenback. The US Dollar Index (DXY) – which measures the USD against a basket of six major currencies – trades around 100.81 after earlier touching 101.13, its highest reading since May 2025.

BoC Signals Contrast as Oil Slide Erodes Hawkish Case

In contrast, inflation dynamics in Canada remain more subdued. At its meeting last week, the BoC notes that US tariffs argue for lower interest rates, even as it acknowledges that sustained strength in energy prices could warrant “consecutive increases in the policy rate.”

However, that hawkish option looks less compelling as Oil prices retreat following the US-Iran truce. The decline in crude reduces the urgency for further BoC tightening and simultaneously weighs on the CAD, given Canada’s role as a key Oil exporter. West Texas Intermediate (WTI) Crude trades around $75.50 per barrel, its lowest level since March 5.

Intraday FX Performance: CAD Underperforms Most Majors

The Canadian Dollar weakens against most major peers on the day, with particular softness versus the US Dollar and European currencies. It does, however, show relative strength against the Swiss Franc.

Canadian Dollar Price Today

The table below shows the percentage change of the Canadian Dollar (CAD) against major currencies today. Canadian Dollar was the strongest against the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.05%	-0.09%	-0.05%	0.23%	0.01%	0.33%	0.37%
EUR	0.05%		-0.04%	0.00%	0.29%	0.07%	0.37%	0.42%
GBP	0.09%	0.04%		0.04%	0.32%	0.13%	0.43%	0.47%
JPY	0.05%	0.00%	-0.04%		0.28%	0.09%	0.37%	0.41%
CAD	-0.23%	-0.29%	-0.32%	-0.28%		-0.17%	0.09%	0.13%
AUD	-0.01%	-0.07%	-0.13%	-0.09%	0.17%		0.29%	0.35%
NZD	-0.33%	-0.37%	-0.43%	-0.37%	-0.09%	-0.29%		0.03%
CHF	-0.37%	-0.42%	-0.47%	-0.41%	-0.13%	-0.35%	-0.03%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Canadian Dollar from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent CAD (base)/USD (quote).